Sibanye increases its industry leading dividend, underpinned by a solid operating performance
Salient features for the six months ended 31 December 2014:
- Final dividend of 62 SA cents per share declared. Total annual dividend of 112 SA cents per share equivalent to a 3.7% dividend yield at 18 February 2015
- Gold production increased by 13% to 27,289kg (877,400oz), compared with the six months ended 31 December 2013
- Total cash cost of R298,520/kg (US$847/oz) and All-in sustaining cost of R376,687/kg (US$1,069/oz)
- R4.0 billion (US$364 million) operating profit
Westonaria, 19 February 2015: Consistent with its strategic positioning and commitment to return cash to shareholders in the form of meaningful dividends, Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) declared a final dividend of 62 SA cents per share for the six months ended 31 December 2014. The approximate R1 billion (112 SA cents per share) total dividend declared for 2014, which represents approximately 44% of Sibanye’s 2014 normalised earnings, is equivalent to an industry leading 3.7% dividend yield at the closing price on 18 February 2015.
The dividend was underpinned by another solid operating performance from the Sibanye operations, which generated an operating profit of R4 billion for the six months ended 31 December 2014. Production increased by 13% for the six months ended 31 December 2014, to 27,289kg (877,400oz) compared with the same period in 2013, at a Total cash cost of R298,520/kg (US$847/oz) and a globally competitive All-in sustaining cost of R376,687/kg (US$1,069/oz). The integration of Cooke also saw Sibanye achieve its strategic objective of bringing lower grade gold resources to account through the production of by-product uranium. Sibanye is now well positioned to exploit extensive lower grade gold Resources and high grade uranium Resources at the Cooke operations profitably. Uranium production from Cooke continued uninterrupted from May 2014, resulting in a uranium inventory of approximately 180,000lbs of U3O8 at year-end.
Normalised earnings (from which dividends are calculated) for the six months ended 31 December 2014 decreased by 5% year-on-year, to R1.2 billion (US$106 million), primarily due to higher taxes and royalties paid for the year ended 31 December 2014. Annual normalised earnings declined by 3% to R2.3 billion (US$206 million). Normalised earnings exclude gains or losses on foreign exchange and financial instruments, non-recurring items and share of associates after royalties and tax and, as a result, tend to be more consistent than basic and headline earnings.
Neal Froneman, CEO of Sibanye, commenting on the results said: “2014 was a year of operational and financial consolidation for Sibanye. Our primary objective was to entrench the new operating model and operational structures, which had been successfully, implemented at the Beatrix, Driefontein and Kloof operations in 2013, whilst integrating the newly acquired Cooke Operation into the Group. We believe this has been successfully achieved and as a result, we are comfortable in forecasting higher levels of production in 2015 at similar costs, which will again underpin our benchmark dividend focus”.
Gold production for the year ending 31 December 2015 is forecast to be between 50,000kg and 52,000kg (1.61Moz and 1.67Moz). Total cash cost is forecast at between R305,000/kg (US$850/oz) and R315,000/kg (US$875/oz), with All-in sustaining cost forecast at between R380,000/kg (US1,055oz) and R395,000/kg (US$1,100/oz). Approximately 250,000lbs of by-product uranium production is forecast.
Sibanye is addressing the risks that inconsistent and increasingly expensive power supplied by ESKOM poses to the sustainability of its operations. In order to mitigate the short term risk, Sibanye continues to work with ESKOM to manage and minimise the impact of load shedding on the operations, by implementing various pre-agreed actions to reduce consumption by the amount required by ESKOM. At this stage, there has been no material impact on the production forecast.
Discussing measures to reduce reliance on ESKOM in the longer term, Neal Froneman said: “In 2014 we completed a pre-feasibility study into the potential of solar power as an alternative source of electricity supply. We are contemplating a phased R3 billion investment, with involvement of financial partners, in establishing a solar photovoltaic generating plant with a peak generating capacity of 150 MW. This represents a substantial portion of Sibanye's overall 500MW power demand by 2017”.
“Sibanye has also undertaken several studies into other alternative energy sources that we consider reliable and over which we will be able to exercise some control, such as coal fired power stations varying in size from 200MW to 600MW. We are also engaging with technology partners in order to develop a deeper insight into independent power generation” Froneman concluded.
James Wellsted Head of Investor Relations Sibanye Gold Limited +27 83 453 4014 email@example.com